Depreciation Allowance

Depreciable assets, including 
pre-production development expenses, 
can be deducted on a declining balance 
basis at a rate of 20%. 

Processing Allowance

A processing allowance of up to 20% 
of the original cost of processing 
assets may be deducted. However, the 
processing allowance is limited to 65% 
of an operator’s profit in a fiscal year. 

New Mine Tax Holiday

A new mining operation 
may be allowed 
a tax exemption 
(a “new mine tax 
holiday”), subject to 
government approval, 
until the operator has 
fully recovered its 
cost of depreciable 
assets, including 
pre-production 
development expenses, 
incurred before the 
commencement of 
commercial 
production. 

Ontario

Ontario Mining Tax

Ontario’s Mining Tax Act imposes an 
Ontario mining tax on operators of 
mines in the province that produce 
defined mineral substances. These 
substances include all minerals except 
diamonds; operators of diamond mines 
are not subject to the Mining Tax Act but 
to the Ontario Mining Act, discussed in a 
separate section below.

The mining tax is levied at a rate of 10% 
on annual taxable profits in excess of 
$500,000 from all mines; however, a 
reduced rate of 5% applies to profits 
from operations at remote sites. While 
Ontario’s corporate tax legislation 
has been harmonized with the ITA 
(see 

Deductions, Allowances, and 

Credits – Other Provincial Credits and 
Adjustments – Ontario Harmonization 
Adjustment

), the mining tax legislation 

has not. As a result, there are some 
significant differences between the 
federal and the provincial statutes with 
respect to the determination of profit 
for tax purposes.

For the purposes of the Mining Tax Act, 
profit is calculated as the excess of 

proceeds received or receivable from 

the output of the mines over the 

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms 
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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 A Guide to Canadian Mining Taxation